Last week, Harvard Law School’s Labor and Worklife Program released the paper titled “Incorporating Human and Labor Rights Risk into Investment Decisions.” The paper argues that mainstream investors for the first time are beginning to assess labor and human rights factors as a way of lowering portfolio risk. This research is part of a broader movement in the investment world around incorporating environmental, social, and governance (”ESG”) analysis into portfolio management.

GovernanceNotes talked with Aaron Bernstein, the principal author of the study. Aaron is currently a fellow and senior research associate at the Labor and Worklife Program. Prior to joining Harvard, he was an editor and writer at BusinessWeek magazine for the preceding 23 years. You can read or download a copy of the report here.

Over the past few days, we’ve heard President Bush, Treasury Secretary Henry Paulson and various lawmakers declare that the root cause of the current financial crisis stems from illiquid assets related to mortgage-backed securities. But what does this really mean? And how can this “radioactive waste” be purged from the balance sheets of financial institutions holding these toxic securities.

On Monday, John Sweeney, President of the AFL-CIO, responded to the original version of the bailout by describing it as “dangerous and ill-conceived.” Critics of the original proposal emphasize that the final plan must include limitations on executive pay and improved governance of public companies, taxpayer equity in distressed companies, independent Congressional oversight and a stimulus package designed to create more jobs.

Will the $700 billion bailout plan resolve the fundamental cause of the crisis? What should the future relationship be between lawmakers in Washington DC and bankers on Wall Street? And how will the crisis impact the Presidential election? Dan Pedrotty, Director of the AFL-CIO’s Office of Investment, joins us to answer these questions and more.

Icahn Launches Campaign to Improve Corporate Governance

Last week, the former corporate raider Carl Icahn declared his intention to use his blog to organize and communicate with lawmakers and regulators in Washington DC about the poor corporate governance practices at U.S. public companies. Is Icahn a wolf in sheep’s clothing for long-term investors or is he a legitimate agent of change in corporate America? Let’s hear your views.

Robert Roach, General Vice President of Transportation at the International Association of Machinists and Aerospace Workers (IAM), discusses his union’s public opposition to the Delta-Northwest merger. In two letters sent to shareholders, the IAM raised several concerns regarding the combination, citing the impact to consumers by higher fares and poor customer service, questionable cost synergies, termination of pension and health benefits for Northwest workers and management’s understatement of the significant challenges involved in integrating the two large carriers.

Watch this video produced by the American News Project called The Faces of the Financial Crisis documenting the rise and fall of Lehman, Merrill Lynch and Bear Stearns and see what their executives walked away with in compensation while shareholders and employees were left fending for scraps.